Back to top

Analyst Blog

Masco Corporation (MAS - Analyst Report) announced at an investors’ conference recently that its sales in the month of November were up in high single-digits; signaling that the fourth-quarter top line could be strong like the past two quarters.

Masco’s third-quarter (results announced in late October) sales increased 12.4% year over year and also beat the Zacks Consensus Estimate driven by volume growth. Volumes benefited from products/programs launches; increased new home construction activity and improvement in repair/remodel activity in North America; and increased outside U.S. sales. Most encouragingly, the company saw some traction in big ticket remodeling which has been sluggish for the past few years during the housing downturn. In addition, management stated that the fourth quarter was off to a strong start with October sales up in high single-digits. With the November sales also up equally, Masco could post another strong quarterly performance next month.

Masco’s third-quarter earnings of 27 cents per share also surpassed the Zacks Consensus Estimate and grew 92.9% year over year driven by solid revenues, cost control and better operating leverage. Margins were also strong and both Installation and Cabinetry segments once again showed strong profitability in the quarter after underperforming in 2012.

At the investor conference, management also highlighted the several strategic initiatives undertaken to drive growth and shareholders’ value. The initiatives included the improvement of underperforming businesses like Installation and Cabinet; solidifying its market position and leveraging its brands, product introductions and product innovation, reducing costs, paying off debt and strengthening the balance sheet.

Masco carries a Zacks Rank #3 (Hold). We are encouraged by the company’s continued focus on product innovation and cost improvements. The company is also divesting its less profitable and underperforming assets to focus more on its core areas. However, though improving trends have been noticed, we await more substantial improvement in Europe, cabinetry business and consumer spending on big ticket remodeling.

Other Stocks to Consider

Better-ranked stocks in the building/construction industry include CaesarStone Sdot-Yam Ltd. (CSTE - Snapshot Report), Trex Co. Inc. (TREX - Snapshot Report) and James Hardie Industries plc . While CaesarStone and James Hardie carry a Zacks Rank #1 (Strong Buy), Trex carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%